Use Closed-Loop Data to Unlock Display Ad Effectiveness

"Data-Driven Thinking" is a column written by members of the media community and containing fresh ideas on the digital revolution in media.

Today's column is written by Matthew Keylock, SVP, Media Partnerships at dunnhumby.

Display advertising has suffered the same ailment plaguing much of digital marketing – frequent irrelevance is easy and cheap. This trend isn't exactly declining. According to comScore, 4.8 trillion ad impressions were served online in 2011, which is an average of 20,753 impressions per Internet user.

With all that noise, the days of relying on demographic and non-behavioral data to inform online advertising strategies are waning. Advertisers and agencies increasingly see the value of integrating online exposure and offline behavioral data to improve their digital strategies. Some are going a step further and leveraging those insights so that their databases and strategies become more sophisticated and granular over time. Since most forms of digital advertising can now be targeted and measured based on actual consumer behaviors, isn't it time to redefine "success" in display advertising?

Starting With the Right Data

Like all direct marketing, display advertising should reach the right people at the right time with the right message to enable brands to incrementally achieve greater success over time. But new platforms and channels are constantly emerging, placing advertisers in the disadvantageous position of playing catch-up. A brand's marketing mix strategy and budget allocation must remain insulated from the shiny new toy syndrome and focus on getting more granular clarity about its customers and how they buy. This requires not just offline shopper data but household-level data, both transactional and loyalty, to give brands a detailed view into campaign performance over time.

Single-source, longitudinal data allows for more accurate measurement at the category, SKU and shopper level with a view into how purchase behavior changes overtime. Rather than understanding which zip codes skew more towards a specific brand, today's measurements allow brands to understand which households in that zip code buy the brand, how they changed over time and what marketing lever deserves attribution for each change.

Using the Right Insights and Metrics

Albert Einstein famously said, "Not everything that can be counted counts and not everything that counts can be counted." Einstein's point resonates within the ad industry at large, because although we are moving away from a mass model to one of data-driven relevance, our measures of success have not evolved. Brand advertisers that believe in the power of household-level data usually face internal criticism from the larger marketing silo where cost and reach, and therefore cheap wastage, still reign supreme.

Too often short-term needs get in the way of long-term success. Today, even if it is "data-driven," display advertising is planned and sold based on metrics that are easy to measure but not necessary relevant. Click through rates and impressions, for instance, tell brand marketers little about advertising performance or its impact on those consumers that are more likely to respond. Useful questions, such as whether a creative or depth of promotion engaged price sensitive consumers, or if it's smart to buy Facebook ads at the same time as an in-store display within the same category aren't being answered. As proving ROI at the campaign level becomes a priority, overall performance success should be based not only on awareness, but whether that awareness drives incremental sales. Only a closed-loop data and insights solution can enable this.

We Can Do Better

Many brands armed with a rich database of online and offline behavioral data are still using demographic rhetoric to describe their targets. A closed-loop strategy allows consumer data to evolve into behavioral-driven insights. Granular, household-level data, allows brands to understand what conditions and for which categories, display advertising generates the greatest lift in the larger media mix. The right insights based on single-source longitudinal shopper data allow brands to study and learn what does and does not work resulting in increasing ROI and more efficient execution.

"Spray and pray" display campaigns will not go extinct in the near future, but it's time the industry starts expecting display advertising to live up to its data-driven potential. With the right approach, a closed-loop display strategy carries great hope for improving the future of media planning and marketing spend.

1 Comment

Great article, Matthew. At Korrelate, we've seen that as more brands begin to prove out ROI at the campaign level, this type of closed loop strategy becomes essential. By leveraging the wealth of online and offline data available, brands can gain insight into the many variables that factor into the success of a campaign; optimizing against these variables in future campaigns boosts ROI and improves the efficiency of overall marketing spend.